Bootstrap Risk Assessment & Management 3

Question 1

When a project team decides to eliminate a risk by changing the project plan to remove the threatening condition, this is called:

Accepted Answer

Risk avoidance

Answer

Risk avoidance involves altering the project plan to eliminate the risk entirely, such as changing scope, schedule, or technology.

Question 2

A contingency reserve differs from a management reserve in that contingency reserves are intended for:

Accepted Answer

Known risks with defined response plans

Answer

Contingency reserves address known risks documented in the risk register, while management reserves handle unforeseen unknown-unknown risks.

Question 3

Which quantitative risk analysis technique simulates thousands of possible project outcomes using random variable sampling?

Accepted Answer

Monte Carlo simulation

Answer

Monte Carlo simulation runs iterative random sampling of risk variables to produce a probability distribution of possible outcomes.

Question 4

A 'secondary risk' is best described as:

Accepted Answer

A new risk created as a direct result of implementing a risk response

Answer

Secondary risks arise from implementing a chosen risk response — solving one problem can inadvertently create another.

Question 5

In decision tree analysis, what does the Expected Monetary Value at each chance node represent?

Accepted Answer

The weighted average outcome based on branch probabilities

Answer

At a chance node, EMV is calculated by multiplying each possible outcome's value by its probability and summing them to find the weighted average.

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